An ambulance pulls up to the Riverside General Hospital in the Third Ward, Thursday, March 29, 2012, in Houston.

Photo By Cody Duty/Staff

Supporters stand with Quanell X as he speaks in front of Riverside General Hospital in July. The group called on the federal government to release funds that were being held from the troubled hospital.

Photo By Johnny Hanson/Houston Chronicle

Riverside was founded 96 years ago by blacks to serve the black community.

Photo By Cody Duty/Houston Chronicle

Supporters at the Riverside General Hospital news conference in July.

Photo By Johnny Hanson

State and federal agents load boxes of documents seized from the Cullinan Professional Building of Riverside General Hospital in 2012.

Riverside General Hospital, a historic institution crippled recently by scandal and mismanagement, surrendered its substance abuse treatment license Thursday as part of a bid to stay in business in a severely reduced capacity.

Effective immediately, the hospital will stop drug abuse and psychiatric treatment and provide only detoxification services.

The move came after the state's top health official traveled to Houston to tour the organization's three campuses for a first-hand look at problems from fire alarms and air conditioning to patient records and food-preparation conditions.

"They are part of an important safety net for us and before we take a dramatic action, I wanted to see myself what was going on," he said. "I told them I could not justify letting them stay open as a facility, nor can I justify state dollars going for care there."

State officials are working to place patients in other programs.

"Now they have to focus on what they can do with the resources they have," said Janek, a former Houston-area state senator. "There is a lot of interest in making sure this hospital survives."

Besides Barbara Jordan and its historic flagship on Ennis, Riverside's Casa Center near the Texas Medical Center is leased as a homeless veterans dormitory. A fourth location on Bellfort was closed by 2008 Hurricane Ike damage.

In the last few years, longtime hospital CEO Earnest Gibson III and 10 others associated with Riverside have been indicted for their alleged roles in a $150 million Medicare fraud scheme. In April, a Harris County judge froze the hospital's accounts at four banks at the request of two creditors who said Riverside owed them more than $7.3 million. Two weeks later, three conservators replaced the hospital's board of directors.

Earlier this year, state officials temporarily closed the Ennis campus because of insufficient staff.

Seeking a new start, the hospital rebranded itself as RC Health - short for Riverside Community Health System - and reopened its 20-bed medical detox unit on July 1 on Ennis under the new banner.

Last month, conservator William "Gerry" Hilliard - who oversees daily operations - said Riverside had about 200 patients and 130 employees, but was struggling to succeed financially because the Centers for Medicare and Medicaid Services is withholding $4 million for services rendered.

The federal program stopped all payments to Riverside in 2012.

Six weeks ago, activists who rallied outside the Ennis location warned that the operation was six weeks away from running out of money.

"We've been asking questions for months. It's almost like they wanted it to be closed," he said.

Hilliard, who has said he was working "to bring in some funding," could not be reached for comment on Thursday.

In the last month, Reliant Energy has sued for $309,000 in unpaid power bills and a federal judge denied the conservators' plea for Gibson, whose federal trial is weeks away, to be allowed to help an institution the new leaders admitted was teetering on financial collapse.

And on Aug. 8, a Friday payday, employees received a letter from Hilliard saying that payroll couldn't cover all employees until the following Monday. The note thanked them for their patience and stated that "Riverside will not close."

The Ennis location retains its general hospital license, for now, Janek said, but should seek to secure the more appropriate specialty hospital license in the next 28 days.